September 08, 2011

The Most Powerful Force in the Universe

Albert Einstein was wrong when he said, "Compounding interest is the most powerful force in the universe." Although this is quite a statement coming from the father of modern physics, I believe Mr. Einstein could have found at least one more force greater than compounding interest.

The idea for this post struck me when I was reading another post, Compound Interest vs. Increased Income--Which Matters More?, on one of my favorite blogs, GetRichSlowly. The general theme was to acknowledge the power of compounding but to remind readers that increasing income can be much more effective for growing financial wealth.

After reading it, I thought for a moment: Yes, compounding interest over long periods of time can turn small amounts of money into a large nest egg; and yes, increasing your income can be even more effective if applied properly. But isn't there something more powerful that can build both financial worth and self worth?

Your desire for material wealth and social status can negate or neutralize anything that compounding and/or increases in income can accomplish. In other words, without contentment, no financial tools or strategies will be able to satisfy your desire for more. Therefore contentment is the most powerful force in the universe (at least in the financial universe).

It's really a simple philosophy: If you are happy with what you have now--if you already have enough--you spend less and save more--you are already rich.

"If thou wilt make a man happy, add not unto his riches but take away from his desires." ~ Epicurus

I believe my posting here underscores the importance of philosophy in finance (or any other aspect of human life) and it highlights the primary theme of The Financial Philosopher. If you do not address some of the basic and timeless philosophical questions, such as Who am I? and What is my purpose? and What is the meaning of my existence?, your lack of self-knowledge, no matter how much external knowledge you may acquire, will erode your quality of life, both inward and outward.

I agree that love is the most powerful force in the universe. This blog post was directed toward the "financial universe."

However, I will say that contentment is a major component of love. For example, many people think that they love someone but grow tired of the relationship. This is not love because contentment was never really a part of the relationship.

About Kent Thune

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